Wireless operator US Cellular has announced it will pay a special dividend of $5.75 a share following the successful completion of an asset sale to Sprint.
The dividend payout will total about $480 million – the same amount it has made from agreeing to hand over to Sprint airwaves and customers in the Midwest.
“We have a strong balance sheet and ample liquidity from our cash balances and the recent divestiture transaction, enabling us to issue this special cash dividend and continue to invest in our business and pursue our strategic initiatives to position US Cellular for long-term success,” said Mary N. Dillon, the president and chief executive of US Cellular.
Payment is to be made on June 25 to shareholders of record as of June 11.
With an 85% stake in US Cellular (Chicago, IL, USA), majority owner Telephone & Data Systems (Chicago, IL, USA) looks set to receive about $409 million of the payout.
Michael Rollins, an analyst with Citigroup, expects the parent company to repurchase about 5–10% of its shares over the next year, according to a report from Dow Jones Newswires.
According to the Dow Jones story, Rollins also thinks US Cellular will look to sell other assets, such as non-core spectrum and cell towers, although US Cellular has not provided a comment on the speculation.
US Cellular’s share price had risen by 2.2% on the New York Stock Exchange by midday on Monday.
News of the special dividend follows a disappointing financial quarter for US Cellular, which lost 32,000 contract customers in its core markets during the three months to end-March, leaving it with 4.64 million altogether.
The company also reported a 3% fall in service revenues, to $996 million, compared with the same period last year.
US Cellular has been struggling to keep pace with AT&T (Dallas, TX, USA) and Verizon Wireless (New York City, NY, USA), the country’s two largest cellular operators, although recently announced it would begin stocking Apple’s iPhone, which may help to boost customer loyalty in future.